Cyberlaw Cases

In today’s New York Times, there is an excellent article on the ongoing battle between companies and consumers over online criticism. In addition to discussing the various lawsuits that have been brought, the article also noted the following:

Recognizing that lawsuits can bring more unwanted attention, one organization has taken a different tack. The group Medical Justice, which helps protect doctors from meritless malpractice suits, advises its members to have patients sign an agreement that gives the doctor copyright over a Web posting if the patient mentions the doctor or practice.

Dr. Jeffrey Segal, chief executive of Medical Justice, said about half of the group’s 2,500 members use the agreement.

“I, like everyone else, like to hear two sides of the story,” he said. “The problem is that physicians are foreclosed from ever responding because of state and federal privacy laws. In the rare circumstance that a posting is false, fictional or fraudulent, the doctor now has the tool to get that post taken down.”

This so-called “agreement” strikes me as both legally and ethically suspect. Not only does copyright law generally require written assignments of copyright to be for some kind of payment (what is the payment here? The medical treatment? I thought that was what health insurance and co-pays were for?) but unless it is a work-for hire or some other kind of ongoing employment relationship, you generally can’t force people to assign their copyright in a web posting before it is written.

Moreover, such an agreement seems unethical under the American Medical Association Ethics Code. AMA Ethics Opinion 8.03 states:

Under no circumstances may physicians place their own financial interests above the welfare of their patients. The primary objective of the medical profession is to render service to humanity; reward or financial gain is a subordinate consideration. For a physician to unnecessarily hospitalize a patient, prescribe a drug, or conduct diagnostic tests for the physician’s financial benefit is unethical. If a conflict develops between the physician’s financial interest and the physician’s responsibilities to the patient, the conflict must be resolved to the patient’s benefit.

Since the main concern of Medical Justice appears to be preventing harm to the physician’s reputation (and thus financial interest), forcing patients to assign away their copyrights in exchange for medical care strikes me as close if not over this line. It certainly is not putting patients first. When a patient goes to see a doctor, they are often anxious, in pain, or worried and thus in a very psychologically vulnerable position, or what the law often calls a position of “duress” where they will often sign documents without giving them proper consideration. This hardly seems to me to be a fair time to demand they assign some unknown number of future copyrights to their doctor; instead it feels like a huge power grab by the physician.

Moreover, as Dr. Segal states in the article, these so-called “assignments” of copyright become a “tool” to take posts down from the Web. One can surmise that he intends for these doctors to invoke the notice-and-takedown provisions of Section 512 of the DMCA as a convenient way to censor criticism and cajole websites like Yelp! to remove the postings. However, this too strikes me as unethical and a potential abuse of the DMCA system. The DMCA takedown system was meant to allow copyright owners whose works were being posted online by others and costing them sales of copyrighted goods (e.g. movies and music) to enjoy an expedited process for stopping infringement and limiting economic harm to their content.

Here, it is clear that these web postings have no economic value as content to the physicians — rather they are, at best, potentially harmful to their reputations (note again, though, that this would likely be a violation of their ethical duty either way).

I should note that much of this is speculation on my part. I have not seen this so-called agreement and have not heard of any doctor taking things off the web based on it; but it does strike me as ironic that a group like Medical Justice, which proclaims its mission as “relentlessly protecting physicians from frivolous lawsuits” would embrace and endorse potentially frivolous, unethical, and abusive legal documents and actions to further its goals.

Case and Court:

• Vernor v. Autodesk, Inc. (W.D. Wash.).

In this blog’s previous coverage of the “Copy Ownership Cases,” I attempted to briefly summarize three important cases where ownership of copies is critical and so did not delve into a detail relevant to this update.

The decision in Vernor v. Autodesk from May of 2008 was a decision on Autodesk’s motion to dismiss the case. Motions to dismiss are among the first motions one might file in a federal case and occur prior to the exchange of documents or the deposition of witnesses that occurs during the discovery process. Typically once that discovery process is complete, the parties may bring motions for summary judgment in which a party will argue that, based on the undisputed facts, and resolving any disputed fact in favor of the other party, the court can simply apply the law to those facts and rule in their favor. In a grand demonstration of the ability of opposing lawyers to take on diametrically opposed world views, parties often both file such summary judgment motions, which are called “cross-motions” for summary judgment.

Such cross-motions for summary judgment were filed in Vernor v. Autodesk and the court held oral argument on the motions on Tuesday, Sep. 29, 2009. A few news outlets covered the oral argument: PC World, Zeropaid, Slashdot.

With somewhat dizzying speed, the court issued its opinion on the cross-motions for summary judgment the next day, Sep. 30, 2009. Having seventeen months to consider any new developments, the court was obviously not persuaded that anything important had changed as it reached the same conclusions for the same reasons, and directed the clerk to enter final judgment for Vernor.

The court’s opinion is, like its earlier opinion, careful, methodical, well-researched, and thorough. So many courts addressing the issue of copy ownership have dispensed with the question just by noting that software distributors claim to merely “license” and not to sell their software. The Vernor court finally cuts through this misleading way of framing the question by noting that “the use of software copies can be licensed while the copies themselves are sold.”

The court explains again why the Ninth Circuit precedent that it is bound to follow, United States v. Wise, requires the result that Vernor is the owner of the copies of the software. “Wise requires the court to look at a transaction holistically, and the court finds no basis for the conclusion that an agreement to permit perpetual possession of property can be construed as reserving ownership.” This is the key factor in copy ownership cases: perpetual possession. When a transaction results in an individual being entitled to perpetual possession of the copy, as was the case for Vernor, then courts should find that such individuals are owners of their copies, entitled to a “first sale” right to resell the copy if they so choose.

Autodesk now has to decide whether to appeal this ruling and has to do so without the benefit of Ninth Circuit guidance in UMG Recordings, Inc, v. Augusto, which has all the briefs filed but has not yet had oral argument and MDY Industries LLC v. Blizzard Entertainment, Inc., in which the briefing on appeal is still ongoing. Decisions in either of these cases could greatly clarify how things will go for Vernor and Autodesk, but the Ninth Circuit’s decisions in these cases are likely over a year away. However, the Vernor court has now, twice, provided a valuable roadmap for future courts that address the issue of copy ownership.

See Also:

• Thom Holwerda, Judge Sides with Vernor, Slams Autodesk, OS News (Oct. 1, 2009).
• Nancy Gohring, In Autodesk Case, Judge Rules Secondhand Sales OK, PC World (Oct. 1, 2009).

Cases and Courts:

• UMG Recordings, Inc. v. Augusto (C.D. Cal.), appealed to (9th Cir.).
• MDY Indus. LLC v. Blizzard Entm’t, Inc. (D. Ariz.), appealed to (9th Cir.).
• Vernor v. Autodesk, Inc. (W.D. Wash.).

Background

The so-called “license versus sale” distinction that arises with respect to copies of software or music will confront the Ninth Circuit in three upcoming cases. In UMG Recordings, Inc. v. Augusto,¹ the district court found that, notwithstanding “not for resale” labels, the initial recipients of “promo CDs” owned them and were thus entitled to sell the CDs to others.

In MDY Indus. LLC v. Blizzard Entm’t, Inc.,² the district court held that purchasers of Blizzard’s World of Warcraft software are not owners of their copies of the software, and hence are not entitled to a Section 117 defense that would allow the owner of a copy of a computer program to make a copy of the program, provided such copy is created as an essential step in the utilization of the program.

Finally, in Vernor v. Autodesk, Inc.,³ the district court found that the transfer of Autodesk’s AutoCAD software to a third-party was a sale, and that Vernor, having acquired AutoCAD from the third-party, could invoke the first sale doctrine in order to resell his copies of AutoCAD on eBay without liability for direct or indirect copyright infringement.

These cases present the Ninth Circuit with multiple opportunities to revisit its decisions in the license versus sale context. The Vernor court wrote that these precedents are in irreconcilable conflict, which it could only resolve by following the earliest precedent. Continue Reading »

1. UMG Recordings, Inc. v. Augusto, 558 F. Supp. 2d 1055 (C.D. Cal. 2008). [↩]
2. MDY Indus. LLC v. Blizzard Entm’t, Inc., 89 U.S.P.Q.2d 1015 (D. Ariz. 2008). [↩]
3. Vernor v. Autodesk, Inc., 555 F. Supp. 2d 1164 (W.D. Wash. 2008). [↩]

Case and Court:

Facebook, Inc. v. Power Ventures, Inc. (N.D. Cal.)

Background:

This lawsuit involves Power.com, a third-party platform allegedly “scraping” content for and from users on different social network sites into a single user interface. Facebook sued Power, claiming violations of copyright, anti-circumvention regulations, CAN-SPAM, and the Computer Fraud and Abuse Act. More on the case can be found here.

Upon a motion to dismiss the case, Judge Fogel upheld the complaint, primarily addressing the copyright and circumvention claims and whether to dismiss any of the claims outright because they were based on invalid legal theories. He refused to do so based on two cases that have troubled many copyright and internet scholars: MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993) and Ticketmaster LLC v. RMG Techs., Inc., 507 F. Supp. 2d 1096 (C.D. Cal. 2007).

Fogel’s reasoning, under these cases, is that any scraping of a webpage involves copying that webpage into a computer’s memory in order to extract the underlying information contained therein. Even though this “copying” is ephemeral and momentary, he held that it is enough to constitute a “copy” under Section 106 of the Copyright Act and therefore what we lawyers call a prima facie (or “on its face”) case of infringement. Since Facebook’s Terms of Service prohibit scraping (and thus, Facebook has not given any license to third parties or users to do so), the copying happens without permission. Continue Reading »